What would you estimate the average net worth is of an IB MD at age 40? Going with IB because in general it is easier to estimate vs PE where it is so impacted by the success of the firm / investments. Let’s say a 40 year old who started in IB out of college, rose the ranks in the typical time frame, saved a typical amount each year, got the S&P 500 rate of return every year, received mid-top bucket bonuses every hear (which would likely be the case if they made it to MD). What would you guess their net worth is? What about by age 50?
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$500mm give or take
In all seriousness, it’s so extremely variable person to person with spending and saving habits and what they invest in that it’s impossible to give an answer nor does it even matter. If you are curious then make a simple model and see how much they could have. Hopefully this is not an exercise that guides your career path because if so, then Good Luck!
$500mm? Rookie numbers. Average MD at my firm (think PJT, EVR, RBC) net worth is $2bn.
Congrats on RBC
Have spoken to a few MDs around that age bracket or slightly older and it seems that $10MM is a reasonable benchmark if you make MD in your early 30s.
The short answer is probably not as high as you think. I would guess maybe 2.5 - 3mm by 40.
Comp is not what is used to be, and many of them have pretty expensive lifestyles. I would bet most MDs are luck if they can save $200k after tax.
Other huge variable is how vested stock performs. Look at 10 year stock charts of JPM vs DB.
d
for BB/solid MM, this my guess as a single 30 y/o VP with $1mm (went from A->A->VP):
40 y/o MD: 2 - 5mm (higher end for single MDs)
50 y/o MD: 5 - 25mm
over 55/60: you must live quite a lavish lifestyle cause idk wtf ur doin working still
DB MDs over the last 5 years have been getting breaded with the stock recovery but true if you’ve been at either of these firms for 15+ years
Say your average MD at 50 is making 2.5 mill (I'm not an MD... don't know if this is what they are paid these days).
40 percent tax (conservative).
1.5 million remaining for household expenses and savings etc.
Let's say you live decently, spend 750k a year. You save around 750k every year.
Say you saved a million by the time you hit 40 in 2014.
You reinvested in the sp500 at a 100 percent allocation and did this for around 10 years, you are worth around 15 million.
Would bet it’s an order of magnitude higher for first wife and one or zero kids. And decreases for the marginal wife and kid. Anywhere from ~$20M to 2.5M.
These are the biggest variables in NW at that YoE. Barring massive investment losses or other reckless behavior, it’s difficult to blow millions on purchases that don’t appreciate or at least retain value.
Agreed. Your wife / life partner is probably the most consequential decision anyone makes aside from how many children to have and how they're raised.
Having kids in your 20s in a HCOL city will easily halve your net worth at retirement. It costs $100k of pre-tax income to raise a kid outside of private school expenses which can cost up to another $100k in pre tax income. Per kid.
That's per year, not in total.
What does the breakdown for childcare look like / why is it so expensive?
In NYC a nanny is $4-6k a month depending on how many kids you have/hours a week nanny is working. Daycare is $3-4k+ a month.
Why is the benchmark at tht age?
Have a few friends that are early MDs, early 40s. Pretty sure the answer is liquid 2-3mm range. For those that bought houses years ago the total net worth is higher bc of the run up on re prices. But absent house equity, I think 2-3mm is a fair range. That said, this should really torque in your 40s, assuming you're not doing 50k a year independent schools, 200-500k country clubs, crazy expensive vacations, super expensive nannies, expensive cars, etc. or at least not all of the above. There are 50 year old MDs with a ton of money, and those with not nearly as much as they should do to living fast and loose.
For the younger people on here, you'd be surprised how many people live pay check to pay check on 1-2mm comp.
What do you think rainmakers at GS make yearly and average NW after making partner? I can't find any info about GS comp/partner bonuses online. One of their famous MDs Jim Donovan shows as 100m+ NW but there are comments saying he's not IB. I just wanna know the average partner/md yearly comp and like a good estimate for someone like him at the top end of the scale.Ty.
Idk, prob enough to not worry about how much they make. My guess would be over 10mm, how much over no idea.
around 20-30mm for your "average" rainmaker MD at a tier1 BB, there have been MDs who have supposedly cleared 9figs in the past but this is obviously way way way outside of the norm. also gotta realize you can probably count the total number of these MDs in the industry as a whole on two hands any given year
Net worth = Income * age/10
Therefore, assuming the average 40 year MD makes around 1mm we could assume their net worth would be 4mm
Honestly I’d be surprised if more than $2.5 million unless he’s a penny pincher
i'm constantly surprised at how much keeping up with the jones' goes on (everywhere, not just finance people)
Used to work in WM and managed some of the MDs money at the bank I was with because they had to have accounts internal. This was a BB but you’d be shocked on how little these guys save up. Grant it, most of them were in nyc but 40s and 50s, most had 1-3mm in networth including real estate. All of them spent so much money, fat vacations, fat purchases, eating out at nice places constantly. It adds up and honestly, MDs making 1mm+ in a big city with horrible spending habits due to delayed gratification = lots on the credit card.
working in WM made me realize that the dude with 2-3 homes and nice cars many times really just inherited their parents nest egg on top of their own savings. After that, I realized I could never truly judge anyone’s job/success on the things they buy, it doesn’t add up or equate to their career earnings. Had clients and friends who married into powerful families but passed it off like it was their success…found it interesting on how things are behind the curtains.
Great point, anytime you see somebody living a really nice life who appears to have a good corporate job on paper they most likely have some help. Nothing wrong with that, but most finance jobs working for somebody else just don't allow you to have that 0.1% lifestyle like they used to. Costs of housing, healthcare and education have massively outpaced wages especially wages that banks are paying.
Here is an interesting question- who made more money/was worth more the PWM guys you worked with or the MD clients? 1-3MM including RE is not a very big account in PWM.
Way too much variance to give a real answer. Some people spend 90% of their pay check. Others spend 30%. $5-40 million is a good range, depending on rsu/options and everything. My dad in ‘08 got his clock cleaned by Merrill. A family friend at Lehman or whatever had losses 2x my dads were. Compare that to someone who didn’t got through that and spending habits alone you have a major difference.
Add personal circumstances and lucky or not lucky investments and the range is wider
Im mid 40s and c20 (7 property, 3 liquid and 10 illiquid including deferrals but also angel and venture) marked at book. I’d say I’m def top quartile as an earner ( group head at a mm) and other than expensive vacations and private school for the kids live simply (very happy with my 10 year old truck). Significant family support and charity contributions baked in (not to sound holier than thou but didn’t come from much and got very lucky so need to support those who helped me). Hope to be at 30 at 50 and 50+ on retirement. Upside depends on those venture and angel investments.
Head of my group is 100mm plus, he’s working purely for the fuck of it.
But accumulated wealth, is just a life deficit.
All the things I wanted when I was poor: steaks and booze, I can’t have now, cuz I need to feel good and don’t want to feel like shit.
So my expense profile is lower, but my income is higher.
I promise steaks are not what are making you feel like shit.
It really depends on savings as others have alluded to.
I am 30 and and A2A and now a VP2. Have a NW of ~$1mm all in (could be higher I really did not live that frugally).
I am pretty comfortable now with my lifestyle and don’t feel like I need to take the next step to expensive shit. Granted I rent in NYC and don’t own a home.
I’ve done the math countless times when I should be doing my real work - if I stay on my trajectory and stay relatively frugal I will have ~$6mm at 40 (assuming market returns and low to mid bucket bonuses). That does not account for any home purchases, but I’d argue home equity would be in NW anyway.
Current plan is to save as much as I can and hopefully make MD, then at 40 when I have a nice nest egg make some more frivolous purchases (I want a beach house).
If you do the math if you continued to live reasonably and save by the time you are 50-60 you would have 30-40mm. Of course you would have to work a long time at a demanding job and then not have a major expensive jump like most MD’s when they hit that level of success
Do they have broke losers for parents or idiots for siblings. so they have to kick back money to take care of family?
Or are their parents and siblings also winners, so they can save and invest as they please?
Great question padawan!
And if you’re a PE partner you’re going to have a net worth multiple times that of an MD
Well duh ones a Partner and one is an MD. Compare Partners at EBs to Partner at PE funds. They are virtually the same in terms of comp.
Know many Partners in IB making 10mm+ a year.
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